I’ve thrown a lot of words at Nerd’s Eye View readers over the past week; this week I’ll try to stick mostly to pictures. Mostly.
What follows is a roundup of charts depicting the latest (that would be November) Case-Shiller home price data for San Diego.
First, the decline from the November 2005 peak:
OK, I can’t resist some words here. Note that the high-priced tier fell substantially harder than either of the other two. It was down 3.3 percent for the month as opposed to 1.0 percent for the mid-priced tier and 1.7 percent for the low-priced tier.
The tiers, you may recall, are created by simply separating all the home sales into thirds by price — the high-priced tier is the most expensive one-third of homes sold, etc. The cutoff points between tiers have been dropping due to the fact that more low-priced homes are selling. However, the Case-Shiller indexes are calculated based on subsequent same-home sale prices, thus assuring that the changes within each price tier aren’t thrown off by shifts in the quality of properties are being purchased. This is why the Case-Shiller index is much better than the median price at measuring actual price changes in the housing market.
In any case, the more dramatic fall in the high tier is a possibility I’ve been anticipating for two reasons: one, that sales volume (and thus demand) at the higher end has been dismal; and two, that the more generalized economic and employment pain of late would affect high-end areas in a way that the prior subprime financing debacle had not.
That was a long sentence for an article that promised few words.
Moving on, here is the same chart as above but adjusted for Consumer Price Index inflation. The CPI fell in November (as recently discussed at excruciating length here and here), so the CPI-adjusted prices actually did better than their nominal counterparts. The middle and low tiers even rose in CPI-adjusted terms:
Here is a look at the three price tiers as well as the aggregate home price index since the start of the decade:
And here’s the same thing adjusted for CPI inflation:
Here’s the entire series going all the way back to its inception in 1989, first in nominal terms and then adjusted for CPI inflation:
And finally, a table showing how far back in time home prices have gone in both nominal and inflation-adjusted terms:
— RICH TOSCANO